Vikram Akula: The Loan Ranger

In mid-October, India's number one micro lender, SKS Microfinance's founder Vikram Akula was issued an arrest warrant in Yemmiganur town in Andhra Pradesh's Kurnool district. The charges were the violation of the draconian Andhra Pradesh Microfinance Institutions Ordinance 2010. While the state high court stayed the arrest warrant, Akula, controversy's favourite child who wears FabIndia and Dhara kurtas, has been facing numerous problems since his gangbuster $350-million Initial Public Offering (IPO) earlier this year. Unfazed and unperturbed, Akula pursues his single-minded goal of providing access to micro finance for the rural poor.

Are his problems due to his IPO, or is there politics involved? A whiff of politics is certainly in the air for Velugu (Light), a World Bank-state government-funded programme for the poor now rechristened Indira Kranthi Pathakam, appears to be impacted due to the dominance of micro lenders like SKS in Andhra Pradesh. Questions are now beginning to be asked in Andhra Pradesh - how was this company creating wealth for 10 years, without appearing on the radar screen? Over the past 13 years, SKS has distributed Rs 19,841 crore and has a member base of 7.8 million. The business model is simple - replicate the Grameen Bank format of group lending to five women.

Akula left India when he was three, accompanying his parents to the land of milk and honey - USA. Graduating from Tufts, with a Masters from Yale and a doctorate from the University of Chicago, the founder chairman of SKS Microfinance was fighting a bitter divorce battle with his estranged wife Malini in 2004. Rushing back to Chicago, Akula found himself staring at a debt of $90,000 and joined McKinsey & Company for financial stability. An idealist, he studied philosophy and political science and is not a business person either by DNA or training.

Akula left India when he was three, accompanying his parents to the land of milk and honey -USA. Graduating from Tufts, with a Masters from Yale and a doctorate from the University of Chicago, the founder chairman of SKS Microfinance was fighting a bitter divorce battle with his estranged wife Malini in 2004. Rushing back to Chicago, Akula found himself staring at a debt of $90,000 and joined McKinsey & Company for financial stability. An idealist, he studied philosophy and political science and is not a business person either by DNA or training. He spends about three to four days in his Hyderabad office and two days in the field - travelling to the 19 states where SKS has its business swathe.

SKS though has evolved over the years from anon-profit NGO to a non-banking financial company and now a full-fledged micro finance lender with venture capitalists like Vinod Khosla, Sequoia Capital, N.R. Narayana Murthy's Catamaran, Kismet and Sandstone, among others, investing in it. One of the accusations against Akula is that the character and hue of his enterprise has changed time and again. But that is not all as Akula also faces problems on a personal front. A messy divorce and custody battle with wife Malini over son Tejas is only adding to his woes. Akula doesn't want to discuss the custody battle, but he avers, "My son's long-term welfare prompted me to file for custody.

Unfortunately, this is now a legal proceeding and there is a court gag order in place. It is unfortunate that my exwife has violated this gag order that is meant to protect our son. It would not be appropriate - or in the well-being of my son - to pursue it in the press so I will not be commenting further." Wife Malini, of course, views it from a totally different prism when she argues, "Vikram is an interpersonally exploitative individual who parasitically draws the life blood out of others, both in his personal and professional life, to obtain what he wants, only to discard them once they no longer have any utility or dare to challenge him, his power, or his authority." Harsh words. For Akula comes across as a very soft and understated individual.

A spate of suicides in Andhra did not help, 31 of them in a month and as many as 17 of them being recipients of SKS's micro lending. Talking to INDIA TODAY about the Ordinance, Akula says, "One reason is that some rogue financiers have been established and they are using unethical practices." But somewhere, the problem of rural indebtedness has also gained currency as households have accessed credit from both - self help groups (SHGs) and Microfinance Institutions (MFIs). This led to suicides, creating a furore in the local media. Akula avers, "Suicide is a complex issue but we investigated the 13 cases of SKS borrowers committing suicide. None was a defaulter, so there is no question of having put pressure for collections. In 13 years of operations across 1,00,000 villages in 19 states, we have never been accused of contributing to suicide."

Vijay Mahajan, president, Microfinance Institutions Network (MFIN), says, "Sorry to say that the sector has rendered itself indefensible as it has grown recklessly. The SKS IPO was the last straw that broke the proverbial camel's back." But all this has put the industry under a cloud. Suresh Gurumani's removal did not help.

In this volatile vortex of Andhra politics, it was also highlighted that Congress General Secretary Rahul Gandhi had a SKS connection. Talking about the Gurumani exit, Akula says, "The board took the decision to terminate him because, post-IPO, there emerged interpersonal differences between Mr Gurumani and members of the management team." Alok Prasad, CEO of MFIN, says that the MFIs have been told to fall in line. The battle between the SHGs and MFIs has resulted in a game-changing ordinance where the level of accountability just got tighter. Meanwhile - Vikram Akula - perfect imperfect hero has got skewered.

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